This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on September 6, 2002, basing its approval solely on the facts and circumstances stated herein.
 

May a state commission contract with a multi-media business that is owned by the father of a state employee and that employs the state employee when the state employee works for another state department whose executive head is chairman of the board of the state commission seeking the multi-media contract?

State law restricts the Mississippi Ethics Commission to interpreting and issuing opinions on Sections 25-4-101 through 25-4-119, 1972 Mississippi Code Annotated and Article IV, Section 109, Mississippi Constitution of 1890.  Therefore, this opinion does not address the Mississippi laws outside the Commission’s jurisdiction nor the governmental entity’s internal rules and regulations.

The pertinent conflict of interest laws to be considered here are:

Code Section 25-4-101 states:
 

“The legislature declares that elective and public office and employment is a public trust and any effort to realize personal gain through official conduct, other than as provided by law, or as a natural consequence of the employment or position, is a violation of that trust.  Therefore, public servants shall endeavor to pursue a course of conduct which will not raise suspicion among the public that they are likely to be engaged in acts that are in violation of this trust and which will not reflect unfavorably upon the state and local governments.”

 
Code Section 25-4-103(a), (c), (d), (e), (f)(i)(ii), (g)(v), (h), (k)(ii), (l), (p)(i)(ii)(iii) and (q) state:
 

“(a) ‘Authority’ means any component unit of a governmental entity.

(c) ‘Business’ means any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, holding company,  self-employed individual, joint stock company, receivership, trust or other legal entity or undertaking organized for economic gain, a  nonprofit corporation or other such entity, association or organization receiving public funds.

(d) ‘Business with which he is associated’ means any business of which a public servant or his relative is an officer, director, owner, partner, employee or is a holder of more than ten percent (10%) of the fair market value or from which he or his relative derives more than One Thousand Dollars ($1,000.00) in annual income or over which such public servant or his relative exercises control.

(e) ‘Compensation’ mean money or thing of value received, or to be received, from any person for services rendered.

(f) ‘Contract’ means:
 

(i) Any agreement to which the government is a party; or

(ii) Any agreement on behalf of the government which involves the payment of public funds.

(g) ‘Governmental’ means the state and all political entities thereof, both collectively and separately, including but not limited to:
 

(v) Any department, agency, board, commission, institution, instrumentality, or legislative or administrative body of the state, counties or municipalities created by statute, ordinance or executive order including all units that expend public funds.

(h) ‘Governmental entity’ means the state, a county, a municipality or any other separate political subdivision authorized by law to exercise a part of the sovereign power of the state.

 
(k) ‘Material financial interest’ means a personal and pecuniary interest, direct or indirect, accruing to a public servant or spouse, either individually or in combination with each other.  Notwithstanding the foregoing, the following shall not be deemed to be a material financial interest with respect to a business with which a public servant may be associated:
 

(ii) Ownership of any interest of less than two percent (2%) in a business where the aggregate annual net income to the public servant therefrom is less than Five Thousand Dollars ($5,000.00);

(l) ‘Pecuniary benefit’ means benefit in the form of money, property, commercial interests or anything else the primary significance of which is economic gain.  Expenses associated with social occasions afforded public servants shall not be deemed a pecuniary benefit.

(p) ‘Public servant’ means:
 

(i) Any elected or appointed official of the government;

(ii) Any officer, director, commissioner, supervisor, chief,  head, agent or employee of the government or any agency thereof, or of any public entity created by or under the laws of the State of Mississippi or created by an agency or governmental entity thereof, any of which is funded by public funds or which expends, authorizes or recommends the use of public funds; or

(iii) Any individual who receives a salary, per diem or expenses paid in whole or in part out of funds authorized to be expended by the government.

(q) ‘Relative’ means the spouse, child or parent.”

Code Section 25-4-105(1), (3)(a) and (4)(b) states:
 

“(1) No public servant shall use his official position to obtain pecuniary benefit for himself other than that compensation provided for by law, or to obtain pecuniary benefit for any relative or any business with which he is associated.

(3) No public servant shall:

 

(a) Be a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent, other than in his contract of employment, or have a material financial interest in any business which is a contractor, subcontractor or vendor with the  governmental entity of which he is a member, officer, employee or agent.

(4) Notwithstanding the provisions of subsection (3) of this section, a public servant or his relative:
 

(b) May be a contractor or vendor with any authority of the governmental entity other than the authority of the governmental entity of which he is a member, officer, employee or agent or have a material financial interest in a business which is a contractor or vendor with any authority of the governmental entity other than the authority of the governmental entity of which he is a member, officer, employee or agent where such contract is let to the lowest and best bidder after competitive bidding and three (3) or more legitimate bids are received or where the goods, services or property involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws..”

Pertinent facts and circumstances provided by the requestor, absent identifying data, are set forth as follows and considered a part of this opinion.
 

I would like to request an official opinion from your office relative to the below stated facts.  I am Commissioner of a Department of the State (Department), as well as being the Chairman of a State Commission (Commission).  The Department and the Commission are separate and independent state agencies.

There is an employee at the Department who works in our information management division (IMD).  All of his salary and benefits are paid solely by the Department.  The employees in the Department’s IMD perform some services for the Commission in the nature of employee training and technical support.  These Department employees do not receive any salary or compensation from, nor are they employed by, the Commission.

 
The employee’s father owns a unincorporated business of which he is the sole owner.  The business provides multimedia services, including power-point presentations, and it rents out T.V. screens, stages and karaoke machines.  The Department’s employee works part-time for his father’s business on weekends and is paid by the hour for his services.  In the last twelve months, the employee was paid approximately $2,800.00 in wages by his father.  The Department’s employee does not own any of the property used by his father’s business, nor does the employee have an equity stake in that business.

The employee’s father wants to submit a bid on some multi-media services that the Commission will be putting out for bid in the future.  Do our state’s ethical laws and rules prevent the father from entering into a contract with the Commission to provide multi-media services, given the employee’s relationship with the Commission?

Based on a review of the appropriate state laws establishing both the department and the commission, although one individual serves as both commissioner of the department and chairman of the commission,  the Ethics Commission has determined the department and the commission are separate governmental authorities of the state.

Based solely on the facts and circumstances presented by the requestor, the Commission’s opinion is as follows.

Code Section 25-4-105(3)(a), cited above, prohibits an employee of a state governmental entity from having a material financial interest in a business which is a contractor, subcontractor or vendor with the state governmental entity of which he is an employee.

In this instance, the department employee/son would have a material financial interest in his father’s business if he receives from the business an aggregate annual net income of Five Thousand Dollars ($5,000.00) or more, as set forth in the above cited Code Section 25-4-103(k)(ii).  Based on the preceding pertinent facts, the department’s employee did not receive an aggregate annual net income of Five Thousand Dollars ($5,000.00) or more from the business, and therefore, would not be considered to have a material financial interest in the business for the purpose of determining a conflict of interest law prohibition.

Notwithstanding the above, there is an exception to the prohibition set forth in Code Section 25-4-105(3)(a) that could be applicable in this particular instance if the department employee/son did receive an income from his father’s business that resulted in his having a material financial interest in same.

The exception set forth in Code Section 25-4-105(4)(b), cited above, applies when a state employee has a material financial interest in a business contracting  with a state governmental authority other than the state governmental authority employing the state employee.

 
Code Section 25-4-105(4)(b) allows a department employee to have a material financial interest in a business that contracts with or is a vendor to a state governmental authority other than the one employing the department employee.  However, this can only occur if the contract is let to the business as the lowest and best bidder after competitive bidding and three (3) or more legitimate bids were received or where the services involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchasing laws.

Based on a description of the goods and services provided by the multi-media company, it is the Commission’s position that the services could be reasonably obtained from more than two commercial sources.  Therefore, the state commission would be required to receive three (3) legitimate bids to enable the father’s business, to be selected as the lowest and best bid, if the department employee/son were to have a material financial interest in the business.

In summary, the business that employees the department employee would not be prohibited by Code Section 25-4-105(3)(a) from being a contractor, subcontractor or vendor with the commission as the department employee does not have a material financial interest in the business based on the supplied facts.  In addition, the conflict of interest laws would not prohibit the department employee from having a material financial interest in the business if the contract is let to the lowest of three (3) legitimate bids since the commission is a separate governmental authority from the authority employing the department employee.

Notwithstanding the above, the department employee must be made aware of Code Section 25-4-105(1), cited above, which prohibits a public servant from using his official position to obtain a pecuniary benefit for himself, a relative or any business with which he is associated.

Based on the department employee’s job responsibilities to provide services to the commission in the form of employee training and technical support, the department employee is in a position to obtain a pecuniary benefit for himself, his relative (his father who owns the company wishing to bid on services to the commission) and the business with which he is associated (his father’s business).

To avoid using his official position to obtain a pecuniary benefit, the department employee must totally and completely recuse himself from the commission’s contract with his father’s business.  The department employee must take no actions within his department job responsibilities to the commission that would be perceived to benefit himself, his father or his father’s business.

A total and complete recusal requires that the department employee to avoid debating, discussing or taking action on the business’s contract with the commission along with discussing the contract with other department or commission management and employees.

In addition, the requestor should advise the department employee of Code Section 25-4-101, set forth above, which sets the tone for the conflict of interest laws as the Legislature’s “Declaration of Public Policy.” This public policy can be summarized as any circumstance having the potential of creating suspicion among the public and reflecting unfavorably upon the state or local government should be closely reviewed by public servants with the intent to reduce or eliminate any suspicion on the part of the public which detracts from the public’s trust in state or local government.
 

Clearly, a state employee who has an interest in a family business that contracts with another state authority has the potential of creating suspicion among the public and reflecting unfavorably upon the local government.  Therefore, the department employee must avoid situations that would unduly create such suspicion.
 
 
 

Scott Rankin
Executive Director